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| BAKERY PRODUCTS |
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| Executive Summary |
| Biscuits and Cakes
The biscuits and cakes market was valued at £2.68bn in 2000, having achieved year-on-year growth since the mid-1990s. The products are among the most important in the grocery market, accounting for 4.8% of food expenditure in the UK in 2000. According to BMRB International's Target Group Index (TGI) survey, packets of biscuits and crackers were bought by 93.1% of female housewives, while fresh or packeted cakes were purchased by 68.6% in 2000.
Within the biscuits sector, the strongest performing sectors have been children's and healthier eating products, and everyday treats. Children consume over a quarter of all biscuit servings in the UK, although a much smaller proportion of products address this market directly. More recently, both biscuit and cake suppliers have been introducing products to gain from this demographic trend. Healthier eating brands have seen rising sales year-on-year since McVitie's pioneered the sector with the Go Ahead! brand. Everyday treats have seen strong growth, as a considerable amount of supplier innovation has taken place in this sector. This was led by the introduction of the McVitie's Tube format in 2000.
In the cakes sector, the strongest growth has been in cake bars and individual serve products, including more conveniently packaged multipacks. These have been targeted at markets including lunchboxes, 'eat now' and 'eat on the go'.
Growth in both the biscuits and cakes sectors has been strongly driven by product innovation. Brand extensions have been an important feature. New launches have a relatively difficult entry level to be considered successful and brand extension, rather than creation, carries a lesser risk. There has also been a move to developing brand families — such as the Moments range from Fox's Biscuits Ltd and the Manor Bakeries Cake2Go format, encompassing both Mr Kipling and Cadbury's branded products.
There was a considerable shakeout among the major groups in this sector in 1999/2000, with ownership of nearly all the largest companies undergoing a change. However, the brands have remained with little direct impact on the market.
In the short to medium term, Key Note forecasts that the biscuit and cake market will continue to grow year-on-year. New product activity is likely to centre on the snacking and 'eat now' sectors, with brand extensions forming the basis for many of the developments in the biscuit and cake market.
Bread and Bakery Products
The bread sector has been inhibited for a number of years by its status as a mature and saturated market. Retail price-cutting activity in 2000, although less fierce than in 1999, has continued to affect the value of the white bread sector in particular. Key Note estimates that the value of the total market stood at £2.84bn in 2000, an increase of only 0.5% since 1999.
This report covers the white and brown/wholemeal bread sectors, as well as bakery snacks and ethnic and speciality breads. During 2000, growth has continued to slow down within bakery snacks — formerly a particularly dynamic sector — while the ethnic and speciality breads sector has shown strong growth.
The market has continued to be driven by product innovation, as companies seek new ways to add value and to widen the consumer base. Recent developments have centred on, among other things, trying to make the taste and texture of brown bread more 'user-friendly'. Young adult consumers have also been targetted by market advertising. There has been much activity in the area of organic bread and bakery products, with many bakeries introducing or adding to organic ranges.
The popularity of the ethnic and speciality bread sector and organic bread will encourage much market growth in the near future. However, there are unlikely to be any dramatic changes in the rate of growth.
Key Note forecasts that the bread and bakery products market will increase by 4.5% between 2001 and 2005.
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